Both interest rate decisions went as we expected yesterday with the Bank of England’s MPC cutting by 1% to 2% for the first time since 1939 and with the ECB cutting rates by 75bps. The statement that accompanied the BOE release was pretty noncommittal but reiterated that a lower GBP would support activity. Sterling held its ground for the most part although its cross against the euro has fallen this morning to yet another record low whereas Cable has been supported indirectly by talks in Washington DC.

The big 3 automakers met in front of the Senate Banking Committee yesterday having forsaken their private jets and instead driving the 500 miles from Detroit to Washington DC in hybrid cars; God Bless America. ‘Inaction is not a solution’ said Sen. Christopher Dodd and the warm response, for the most part, allowed dollar to take its foot off the gas and release some of it recent gains.

This may not last for long however and we would think that a retest of the 7 year low seen yesterday (1.4465) is likely as Non-Farm Payrolls are set to show yet another massive weakening of the US jobs market. Economists believe that this could be the worst reading in over 20 years with a consensus view of a 334k fall in jobs; an increase of over 100k.

Have a great weekend.

Please feel free to contact me (jeremy.cook@worldfirst.com) if you have any questions or thoughts regarding these updates or if you are interested in a particular event in the calendar. If you would like to discuss your foreign exchange requirements, please contact our:

Corporate Foreign Exchange Team on 020 7801 9050 or our Private Client Currency Exchange Team on 020 7801 9080.

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Disclaimer: The above comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice.

Any rates given are “interbank” i.e. for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms.

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